The Shrine

http://www.iwatchstuff.com/2010/01/warn ... rental.php

Bad news: you're going to have to wait an entire month of February before you can rent Sex and the City 2 from Netflix. In an effort to increase DVD sales, Warner Bros. had worked out a deal with the rental giant to delay all Warner rentals for 28 days after retail release. When your neighbor who's one of those rich jerks who just buys every new DVD he sees near the checkout at Walmart starts trying to chat with you about a new release that didn't look good enough for either of you to bother with in theaters, you're going to have to timidly admit to him, "Sorry, I haven't seen that. I RENT things. I'm too POOR and WORTHLESS to indiscriminately purchase films of questionable quality." You've just brought shame to so many non-conspicuously spending families, Netflix and Warner Bros. Thanks.

That's a pretty shitty thing to do

An overall delay-rental-so-you-can-buy strategy is something I"m actually surprised they haven't implemented yet

Zeus wrote:An overall delay-rental-so-you-can-buy strategy is something I"m actually surprised they haven't implemented yet

Didn't they used to do that to rental stores back in the day... or was it the opposite, you could rent it but not buy it for months...

Anarky wrote:

Zeus wrote:An overall delay-rental-so-you-can-buy strategy is something I"m actually surprised they haven't implemented yet

Didn't they used to do that to rental stores back in the day... or was it the opposite, you could rent it but not buy it for months...

Back in the day, there was no such thing as purchasing, really. VHS tapes in the 80s were $100 each and the market was in renting not buying. That's actually what the rental stores were paying so it was a sweet-ass deal for the studios ($2 tape with a $50-60 wholesale price with the layers of distributors make up the rest of the $40-50; these are estimates). Every once in a while you'd get a used one or a really old flick that they were trying to dump. Then in the late 80s or 90s they started experimenting with purchasing a few months after the rental at like $30 or something. And that's how VHS market was.

Then DVD rolls around and the studios, in what is easily their stupidest move in history, decide that the market is small and only for the hardcore so there was no money in rentals. It just not worth it for them. So they go ahead and try to make the DVD market to be sales, not rentals. If the hardcores are the only ones who really want it, why not get their $25 or $30 instead of $3 for renting? At least that's what it appeared to be to me. Classic money grab technique. And for a while, looked like they were right. DVDs did pretty well revenue-wise for such a small market. If you had a DVD player, you didn't just buy one or two DVDs, you bought lots (high attach rate is the business term).

But in their short-sightedness, they didn't properly anticipate DVDs completely overtaking VHS. So the sweetheart deal they had with VHS tapes was gone. With the DVD purchase price set at $30-40, they could only get $15 wholesale for a $1-$2 DVD, much lower margins (even lower now). There was talk about them trying to limit distribution and bring back the VHS business model but no company wanted to do it, not with the nice coin they were making out of DVD sales, which were growing substantially every year. They were stuck on the path they chose and couldn't come out of it. Too much incentive for one of the studios to buck the trend and have the market to themselves. The whole "proper, actual competition" that was evident in the industry was their achilles heel and there was no regulations or natural oligopoly to fight that natural business factor (unlike, say, the Canadian communications industry that we discussed recently).

So their greediness and money-grabbing mentality destroyed the sweetheart setup they had. So let that be a lesson to everyone: if the government does their job properly and ensures that there is unabated, natural competition in an industry and they only step in when other forces hurt such a natural occurence, it actually helps the public (we're assuming that the regulations exists that do not allow companies to operate in other ways - such as environmental - that also hurt the public good). Wow, what a novel concept, it would be nice if everything was that way, wouldn't it?

Note that Netflix gets access to more WB movies for streaming in this deal. Since streaming is likely the future, I think Netflix made a wise trade, and WB went for the easy money in a market that may dry up.

Here's the real question: with the torrent available the day of or often before the DVD goes on sale, does the delay take away from Netflix's possible audience, most of whom could just as easily download it?

Zeus wrote:Here's the real question: with the torrent available the day of or often before the DVD goes on sale, does the delay take away from Netflix's possible audience, most of whom could just as easily download it?

Well the people savvy enough to stream will probably know how to do that, not sure about the DVD audience